Italy Pushes Back Date for Repaying Debt to Private Firms

By Reuters

July 6, 2014

ROME — Italy will settle the overdue debt it owes to private-sector suppliers by the end of this year, not in July as previously promised, Economy Minister Pier Carlo Padoan said in an interview Sunday.

The Italian state owes some 75 billion euros, or $102 billion, to private suppliers, according to the most recent data from the Bank of Italy. The unpaid bills have starved companies of cash and triggered layoffs, factory closures and bankruptcies. “We will ensure that the arrears are paid off by the end of the year,” Mr. Padoan said, according to Corriere della Sera.

Prime Minister Matteo Renzi promised in March to pay back all the debt in arrears by July. Within a week he pushed back the target date to September.

The government is finding it hard to tackle the problem because of public finance constraints, inefficiency, uncertainty over exactly how much is owed and a reluctance on the part of some public bodies to acknowledge their debts.

In June, the European Commission opened a formal infringement procedure against Italy because of its failure to comply with the Late Payments Directive, which orders governments to reduce payment delays to no more than 60 days.

Mr. Padoan also confirmed reports that Italy might delay the privatization of 40 percent of Poste Italiane, which was planned by the end of this year.

But he said the government was considering accelerating the sale of stakes in energy companies Eni and Enel in order to keep the revenues from its privatization plans on track.

In other remarks, Mr. Padoan ruled out that Italy would have to adopt additional budget correction measures for this year, even though most projections for economic growth are well below the government's official 0.8 percent forecast.